A number of amendments to the German competition law (Amendment) entered into force on 9 June 2017. The key changes are:
It is difficult for General Counsel and their teams to monitor all new developments adequately. With the growth of the Internet and the daily updates to EU competition rules, everyone receives and has access to masses of information, but it is difficult to select that which is really relevant to one’s business.
McDermott’s EU Competition team across Brussels, France, Germany and Italy has authored the EU Competition Annual Review 2016 to help General Counsel and their teams to focus on the essential updates that they should be aware of.
This Special Report summarizes recent developments in EU competition rules during the year 2016 where several new regulations, notices and guidelines were issued by the European Commission and many interesting cases were decided by the General Court and the EU Court of Justice.
All these new rules and judicial decisions can be relevant for international companies operating in the EU. Indeed, in addition to the daily update, this booklet provides an overview of the main recent developments in EU competition rules and can be kept as a ready reference when dealing with complex issues of EU competition law.
The first European citizen to be extradited from Europe to the United States for criminal antitrust conduct recently succeeded in having a Berlin court refer the matter of his extradition to the Court of Justice of the European Union (CJEU) in the context of his damages action with regard to his extradition, after a series of multiple setbacks and a 24-month period of imprisonment.
As many dealmakers doing business in Europe have realized, German and Austrian merger filing requirements are sometimes a bit tricky, and in some respects different from the rules in place at EU level and in other EU member states. For instance, it may be that a transaction has to be notified in one of these two countries although the transaction leads to a mere minority shareholding or one of the undertakings involved achieved (almost) no local turnover.
In this context, it should be noted that companies violating a filing obligation are subject to appreciable fines and run the risk that the closing acts of the transaction are null and void under civil law. Particularly after the recent Spar decision of the Austrian Supreme Cartel Court, which led to a tenfold increase of the fine originally imposed by the Austrian Cartel Court, it can be expected that the amount of fines for competition law breaches will generally increase in Austria. Against this background, it is worth noting some existing peculiarities and some new developments regarding the filing thresholds:
In May 2015, the European Commission launched a two-year, industry-wide inquiry into the e-commerce sector to gather data on the functioning of e-commerce markets, so as to identify possible competition concerns. This sector inquiry focuses particularly on potential barriers erected by companies to cross-border online trade in goods and services where e-commerce is most widespread (e.g. electronics, clothing and shoes), as well as in digital content.
While the European Commission intends to provide specific guidance on European e-commerce issues when it publishes its final report in 2017, early insights can be found in national competition authorities’ recent decisions, particularly in France and Germany.
In France, the French Competition Authority (FCA) announced on 18 November 2015 the closure of an investigation into the contractual practices of the sporting goods manufacturer Adidas, as a result of Adidas’ change in its online sales policy.
This FCA investigation, which had been carried out in coordination with the German Bundeskartellamt (BKA), centered on the company’s restriction of online sales for its selective distributors. The conditions for online sales, which were introduced in 2012, included restrictions on retailers from selling via large online platforms such as eBay and Amazon Marketplace.
The long-awaited ruling on the seeking of injunctions in the context of standard-essential patents encumbered by fair, reasonable, and non-discriminatory (FRAND) terms has been delivered by the Court of Justice of the European Union, in Huawei v. ZTE C 170/130. Although the judgment lays down the legal test applicable to injunctions involving standard-essential patents, and significantly clarifies the landscape that had previously been shaped by the European Commission, a number of issues remain unresolved.
Huawei Technologies entered into negotiations with ZTE Corporation over the possibility of concluding a licence agreement in relation to Huawei’s patent that is essential to the long-term evolution (commonly known as 4G) standard, on FRAND terms. Given that negotiations between the companies were unsuccessful, and because Huawei contends that ZTE continued using the standard-essential patent (SEP) without paying royalties, Huawei brought an infringement action against ZTE, seeking an injunction to stop the sale of certain ZTE products.
In adjudicating the matter, the Regional Court of Düsseldorf considered that the outcome of the litigation largely depended on whether or not the action brought by Huawei constituted an abuse of dominance. Given this consideration, and the uncertainty surrounding the topic of SEP injunctions, the Court made a reference for a preliminary ruling to the CJEU. The Court asked in what circumstances a dominant SEP holder, who has committed to grant licences to third parties on FRAND terms, can seek an injunction to stop an infringement of that SEP, or to recall products manufactured using the SEP, is to be regarded as committing an abuse contrary to Article 102 of the Treaty on the Functioning of the European Union (TFEU).
The Test for SEP Injunctions
The CJEU decided that the following conditions must be satisfied before a dominant SEP licensor can validly bring an injunction against a party infringing an SEP, without acting contrary to Article 102 TFEU.
Notification From The SEP Holder
Prior to taking any action, a SEP holder that has given an irrevocable undertaking to a standardisation body to grant a licence to third parties on FRAND terms, must alert the alleged infringer to the infringement complained about. This prior notice must designate the SEP in question, and specify the way in which it has been infringed.
“Willingness” of The Alleged Infringer
After the alleged infringer has been informed about the infringement, it must (somehow) express its willingness to conclude a licensing agreement on FRAND terms. Presumably, this willingness refers to the alleged infringer agreeing to receive a FRAND offer from the SEP holder. It would seem, therefore, that an alleged infringer who is not prepared to enter into any sort of bona fide negotiations would be presumed to be unwilling.
Unfortunately, although the CJEU refers to the concept of “willingness”, it does not address the criteria for determining the alleged infringer’s willingness. The ruling therefore does not make it entirely clear what the potential licensee should do in order to be treated as willing.
FRAND Offer
The SEP holder must present to the alleged infringer [...]
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For the first time, the U.S. Department of Justice (DOJ) has successfully litigated an extradition of a foreign national on an antitrust charge. This extradition shows that the DOJ is still pursuing individuals it charged several years ago with criminal price-fixing conduct and is a watershed moment in DOJ criminal enforcement of the antitrust laws.
The Higher Regional Court in Düsseldorf yesterday dismissed an action for damages of €1.1 billion brought by GN Store Nord against the German Federal Cartel Office. The judgment sheds some light on the possibility for companies to claim damages in the context of an unlawful prohibition of a proposed merger.
The European Commission today opened a State aid investigation into the German Renewable Energy Source Act (the EEG), claiming that the EEG may have given unlawful advantages to energy-intensive companies in Germany. These companies now face the potential risk that benefits totalling billions of euros may have to be repaid.
The European Commission (Commission) today opened a State aid investigation into the German Renewable Energy Source Act (the EEG). In its preliminary assessment, the Commission has come to the conclusion that the EEG may have given unlawful advantages to energy-intensive companies in Germany.
The EEG aims to support renewable energy by fixing the tariffs that electricity providers must pay for energy from renewable sources such as solar panels or wind turbines. This is known as the EEG Surcharge and electricity providers are entitled to charge their customers to finance these fixed feed-in tariffs for renewable energy. These tariffs are higher than those for energy from traditional sources. The EEG exempts energy-intensive companies from the EEG surcharge.
The Commission has come to the preliminary conclusion that exemption from the EEG surcharge constitutes State aid for the energy-intensive companies and therefore cannot be authorised. Energy-intensive companies that have benefitted from the exemption face the significant risk of the recovery of the alleged benefit. The potential State aid involved is likely to amount to billions of Euros.
Energy-intensive companies are threatened with recovery orders from two sides:
Beneficiaries of the exemption from the EEG surcharge should therefore consider whether to appeal the Commission’s decision to open the State aid investigation or to participate in the investigation by commenting on the opening decision and then prepare to bring an action for annulment against the Commission’s final decision at the end of the investigation.
Beneficiaries also have to analyse whether or not, under national law, they are required to set up accruals for the reimbursement of the alleged aid. They are strongly advised to seek legal advice on this point.
The Commission’s investigation into the EEG should be seen in the broader context of its increased focus on State aid in the energy sector. The Commission today published its draft Guidelines on environmental and energy aid for 2014 to 2020 for public consultation. The text is currently not binding, but is supposed to enter into force in 2014. Amongst other things, it covers the compatibility assessment of State aid for renewable energy. The Commission also today opened a State aid investigation into a fixed feed-in tariff for a period of 35-years for the [...]
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